Lecture 19 Mar. 21, 2018

Constitutional Restrictions on Choice of Law

14th Amendment “nor shall any state deprive any person of life, liberty, or property, without due process of law”

Home Ins. Co. v Dick (US 1930)

article 5545 of the Texas Revised Civil Statutes “No person, firm, corporation, association or combination of whatsoever kind shall enter into any stipulation, contract, or agreement, by reason whereof the time in which to sue thereon is limited to a shorter period than two years. And no stipulation, contract, or agreement for any such shorter limitation in which to sue shall ever be valid in this State.”

constitutionalizing the place of contracting rule constitutionalizing the place of contracting rule? or simply respecting the reasonable expectations of the parties?

NY Life Ins. v. Dodge (US 1918) MO resident purchases insurance from NY ins. co at MO office applied for loan on ins. policy accepted in NY MO resident defaulted under term of policy and NY law ins. co. could cancel policy MO resident died and widow wants to collect MO ct applied MO law, which prohibited cancellation SCt reversed

when can forum procedure beat sister state/foreign substance?

why due process rather than full faith and credit in Dick?

why not the public policy exception?

Full Faith and Credit

Article IV, Section 1. Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof.

Bradford Elect. Light Co Bradford Elect. Light Co. v Clapper (US 1932) - Clapper – citizen of VT – worked for Bradford (VT corp with principal place of business in VT) - Clapper sent to NH to take care of some fuses - electrocuted - administrator chooses to sue in NH - NH allows election of common law or workers comp - VT requires you to waive out of workers comp in beginning of employment relationship - NH ct applied NH law - SCt reversed

what would the 1st Restatement say?

why FF&C and not due process?

was NH interested in its law applying?

Pacific Employers Ins. Co. v. Industrial Acc. Comm’n (US 1939)

which state has a greater interest?

“Although Massachusetts has an interest in safeguarding the compensation of Massachusetts employees while temporarily abroad in the course of their employment, and may adopt that policy for itself, that could hardly be thought to support an application of the full faith and credit clause which would override the constitutional authority of another state to legislate for the bodily safety and economic protection of employees injured within it. Few matters could be deemed more appropriately the concern of the state in which the injury occurs, or more completely within its power.”

But the Court was careful to point out that there was nothing in the New Hampshire statute, the decisions of its courts, or in the circumstances of the case to suggest that reliance on the provisions of the Vermont statute, as a defense to the New Hampshire suit, was obnoxious to the policy of New Hampshire….Here, California legislation not only conflicts with that of Massachusetts providing compensation for the Massachusetts employee if injured within the state of California, but it expressly provides, for the guidance of its own commission and courts, that "[n]o contract, rule or regulation shall exempt the employer from liability for the compensation fixed by this act." The Supreme Court of California has declared in its opinion in this case that it is the policy of the state, as expressed in its Constitution and Compensation Act, to apply its own provisions for compensation, to the exclusion of all others, and that "It would be obnoxious to that policy to deny persons who have been injured in this state the right to apply for compensation when to do so might require physicians and hospitals to go to another state to collect charges for medical care and treatment given to such persons."

what kind of interest matters. Carroll v what kind of interest matters? Carroll v. Lanza (US 1955) Mo resident employed by Mo subcontractor injured in Ark. – taken back to Mo for treatment Ark law allowed for suit against general contractor – Mo law didn’t Ark ct allowed to apply Ark law

[Ark.’s] interests are large and considerable, and are to be weighed not only in the light of the facts of this case, but by the kind of situation presented. For we write not only for this case and this day alone, but for this type of case. The State where the tort occurs certainly has a concern in the problems following in the wake of the injury. The problems of medical care and of possible dependents are among these, as Pacific Employers Insurance Co. v. Industrial Accident Commission, supra, emphasizes. A State that legislates concerning them is exercising traditional powers of sovereignty. Arkansas therefore has a legitimate interest in opening her courts to suits of this nature even though, in this case, Carroll's injury may have cast no burden on her or on her institutions.

something less than constitutionalizing a particular choice-of-law approach?

Roosevelt – must be forum neutral it cannot matter that a contact is the forum’s rather than another jurisdiction’s

which choice-of-law approaches are unconstitutional for Roosevelt which choice-of-law approaches are unconstitutional for Roosevelt? which are constitutional?

Allstate Ins. Co. v. Hague (US 1981)

Footnote 10: “This Court has taken a similar approach in deciding choice of law cases under both the Due Process Clause and the Full Faith and Credit Clause. In each instance, the Court has examined the relevant contacts and resulting interests of the State whose law was applied. Although at one time the Court required a more exacting standard under the Full Faith and Credit Clause than under the Due Process Clause for evaluating the constitutionality of choice of law decisions, see Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S. 532, 294 U. S. 549-550 (1935) (interest of State whose law was applied was no less than interest of State whose law was rejected), the Court has since abandoned the weighing of interests requirement.”

The lesson from Dick and Yates, which found insufficient forum contacts to apply forum law, and from Alaska Packers, Cardillo, and Clay II, which found adequate contacts to sustain the choice of forum law, is that for a State's substantive law to be selected in a constitutionally permissible manner, that State must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair.

Stevens, concurring… “two separate questions must be answered Stevens, concurring… “two separate questions must be answered. First, does the Full Faith and Credit Clause require Minnesota, the forum State, to apply Wisconsin law? Second, does the Due Process Clause of the Fourteenth Amendment prevent Minnesota from applying its own law? The first inquiry implicates the federal interest in ensuring that Minnesota respect the sovereignty of the State of Wisconsin; the second implicates the litigants' interest in a fair adjudication of their rights.”

relevant contacts…?

member of Minn workforce Allstate present and doing business in Minn commuted to work there Allstate present and doing business in Minn post-event move of plaintiff to Minn

Powell’s dissent: - member of Minn workforce Powell’s dissent: - member of Minn workforce commuted to work there - Allstate present and doing business in Minn - post-event move of plaintiff to Minn

can one contact be used only to answer the problem of unfair surprise and another used only to answer the problem of state interests

unfair surprise - member of Minn workforce unfair surprise - member of Minn workforce commuted to work there - Allstate present and doing business in Minn - post-event move of plaintiff to Minn

Minn interests - member of Minn workforce Minn interests - member of Minn workforce commuted to work there - Allstate present and doing business in Minn - post-event move of plaintiff to Minn

Stevens: Does Wisc have an interest Stevens: Does Wisc have an interest? “[I]t was obvious to the parties at the time of contracting that it might give rise to the application of the law of States other than Wisconsin. Therefore, while Wisconsin may have an interest in ensuring that contracts formed in Wisconsin in reliance upon Wisconsin law are interpreted in accordance with that law, that interest is not implicated in this case.”

Clay v. Sun Ins. (US 1964) Ill resident buy ins from British insurer in Ill Insurer does business in Ill and Florida Insured moves to Fla. 2 years later suffers a loss Insurer appeals to provision requiring suit in 1 yr Florida ct applies Florida 5 yr. limitation period compatible with Dick?

how often will the application of forum law violate the Constitution?

Phillips Petroleum Co. v Shutts (US 1985)

PJ over (unnamed) plaintiffs?

State must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair.

common fund?

plaintiff consent to KS law?

We also give little credence to the idea that Kansas law should apply to all claims because the plaintiffs, by failing to opt out, evinced their desire to be bound by Kansas law. Even if one could say that the plaintiffs "consented" to the application of Kansas law by not opting out, plaintiff's desire for forum law is rarely, if ever controlling. In most cases, the plaintiff shows his obvious wish for forum law by filing there.

P (CA) and D(CA) enter into a gambling contract in CA with performance in CA. P sues D for breach in NV. Can they agree to NV law?

what if Kansas law was more generous to the D?

Sun Oil v Wortman (US 1988)

“Although in certain circumstances standard conflicts law considers a statute of limitations to bar the right, and not just the remedy, petitioner concedes, that (apart from the fact that Kansas does not so regard the out-of-state statutes of limitations at issue here) Texas, Oklahoma, and Louisiana view their own statutes as procedural for choice-of-law purposes…”

Ferens v John Deere (US 1990) P (Pa) sues D (Del/Ill) for Pa injury in federal court in Miss Case then transferred to Pa Miss stat lims used

to certify class action the KS ct presumed that all other jurisdictions’ laws are the same as KS constitutional?

what is the constitutional obligation when interpreting sister state law?

“To constitute a violation of the Full Faith and Credit Clause or the Due Process Clause, it is not enough that a state court misconstrue the law of another State. Rather, our cases make plain that the misconstruction must contradict law of the other State that is clearly established and that has been brought to the court's attention.”

what is a federal court’s constitutional obligation when interpreting state law?

P sues D under Pa law in a NY state court P sues D under Pa law in federal court in Pa P sues D under Pa law in a federal court in NY

assume a federal court in New York has misconstrued NY law assume a federal court in New York has misconstrued NY law? when would the US SCt take such a case to decide whether federal court’s Erie obligation has been violated?